Canada Bank Mergers & Acquisitions (Toronto-Dominion Bank)

Photo: Sex appeal for the pink dollars.

Canada has a reputation for being a liberal and accepting society. In recent years, the Toronto-Dominion Bank has actively wooed the gay and lesbian segment of the market by participating in various Gay Pride Parades. This photo was taken at the Toronto Pride 2009.


The Bank of Toronto

The Bank of Toronto, the oldest predecessor of today’s Toronto-Dominion Bank, was established by a number of grain dealers and millers in 1855 to serve Toronto’s mercantile and agricultural community. At the time, Montreal was the main economic and financial centre in Canada (then still a British colony) and its powerful banks often favoured their existing local clients over Toronto’s emerging economy. This lack of attention from Montreal’s banks led to a proliferation of Toronto banks, including the Bank of Toronto.

In 1860, the Bank of Toronto expanded outside of Ontario when a branch was opened in Montreal. By 1863, the bank’s network had expanded to five branches.

The second-half of the 19th century was boom times for North America. Demand for lumber, steel, copper, grains and meat soared due to railway booms and industrialization around the world. Hundreds of thousands of newcomers escaped Europe’s political and economic upheavals and settled in the new frontiers of both the Canadian and U.S. Midwest. The start of the American Civil War in 1865 also stirred demand for Canadian leather, tanning, hardware and even the safety of the Canadian dollar. The good times were, of course, also interrupted by the occasional collapses due to over-heating and over-building in the economy.

Towards the end of the 19th century, the Bank of Toronto expanded westward along with new settlers. Bank of Toronto opened an office in the mining town of Rossland, British Columbia in 1899.

Canada’s economy and the fortunes of the Bank of Toronto gyrated in the first half of the 20th century. The outbreak of World War I saw many Canadians, including roughly half of the Bank of Toronto’s staff, joining the armed forces and suffering a great toll in Europe. Yet, the Great War increased demand for Canada’s natural resources and also led to a huge increase in output of manufactured products. Between 1900 and 1920, the Bank of Toronto expanded from 16 to 161 branches. Peace and prosperity returned for 10 years after the Great War ended in 1918, but the U.S. real estate and stock speculation collapsed on its own weight in 1929, leading to a decade of global economic disaster, unemployment, hunger, sickness and homelessness. The worldwide economic slump of the 1930s was again ended by another world war in 1939. Canadian men and women once again enlisted in the armed forces to fight on the frontline.


The Dominion Bank

In 1871, a group of Toronto businessmen founded the Dominion Bank with an emphasis on commercial banking, particularly in the railway, infrastructure and textile industries. In 1879, the Dominion Bank opened its new headquarters at the corner of Yonge and King Streets in Toronto.

Like the Bank of Toronto, the Dominion Bank began to establish branches in the Prairies in the late 19th century, beginning with a Winnipeg office in 1897. This marked the start of a national branch network.

In 1911, the Dominion opened its first international office in London, which was followed by a New York office in 1919. In 1922, the Dominion’s first branch in the East Coast opened in Saint John, New Brunswick.

During both World Wars, the Dominion Bank helped the war effort by selling Victory bonds, and saw many of its employees joining the army.


The Canada Trust Co.

The Canada Trust Co. can trace its history to Canada Permanent Trust, Huron & Erie Savings & Loan, and the Toronto General Trusts. Canada Trust became part of TD Bank in 2000.

In 1855, the creation of Canada Permanent Building & Savings Society marked one of Canada’s first mortgage lenders. It later became Canada Permanent Trust.

In 1864, Huron and Erie Savings and Loan Society was founded.

Meanwhile, Canada’s first trust company, Toronto General Trusts, was established in 1872.

In 1901 Huron & Erie established a trust subsidiary called the Canada Trust Company in London, Ontario. The parent company and the subsidiary later became one company called Huron & Erie – Canada Trust. Following the lead of the bigger bank rivals, Huron & Erie opened its first western branch in Regina, Saskatchewan in 1911.

In 1961, Canada Permanent Trust Co. and Toronto General Trusts Corp. merged to form the Canada Permanent Toronto General Trust Co.

In 1962 Huron & Erie - Canada Trust reversed the order of its name to Canada Trust - Huron & Erie to better reflect its national scope. In 1976, Canada Trust pioneered its 8 A.M. to 8 P.M., Monday to Saturday branch service. The extended banking hours were so popular that it was adopted by many TD Canada Trust branches after the sale of Canada Trust to Toronto-Dominion Bank.

In 1981, Toronto-area based real estate developing and financing firm Genstar Corp. bought Canada Permanent Mortgage Co. (parent company of Canada Permanent Trust) and four years later, purchased Canada Trustco Mortgage Co. (parent company of Canada Trust). Under Genstar, Canada Permanent Trust was merged into Canada Trust and the combined entity was quickly sold to conglomerate Imasco Ltd. Imasco was founded in 1970 as a 44%-owned Canadian subsidiary of British American Tobacco plc (BAT).


The Toronto-Dominion Bank

The 1950s were the golden age of the 20th century for Canada. A new wave of European immigrants left the ruins of Europe for Canada, strong demand for new homes was further spurred by returning soldiers now ready to get married and start a family, oil was discovered in the province of Alberta, automotive production exploded in Ontario and Quebec with the middle class’ migration to the suburbs, factories churned out products of all sorts for other parts of the world still devastated by the war. Major cities in Canada were busily building new public transit systems, highways, sewage and water lines and power plants to serve the ever-expanding population.

As the size of business and infrastructure loans increased, the existing banks found their capital base too small to meet regulatory requirements. In 1955, the Bank of Toronto and the Dominion merged to form the Toronto-Dominion Bank. The newly-merged bank had 499 branches across the country, plus offices in New York and London.

The computer age arrived in 1962 when the bank installed its first mainframe to allow up-to-date balances for its clients for the first time. Mutual funds were offered across all branches in 1964; then in 1967, the bank began offering Chargex (Visa) credit cards.

In 1967, Toronto-Dominion Bank moved into a newly-built 56-storey tower of the Toronto-Dominion Centre, Canada’s very first modern skyscraper retail-office complex.

The Toronto-Dominion Bank introduced a new green TD corporate identity in 1969, formally adopting the TD initials. Throughout the 1970s, TD Bank opened international offices outside of the U.S. and Britain. In 1976, the bank introduced the automated teller machines (ATM), which were affectionately known as the Green Machines by the bank.

Like other international banks, Toronto-Dominion suffered major losses in the Third World debt crisis in the mid-1980s. In 1984, the bank launched the Green Line Investor Services discount brokerage for self-serve retail investors. This preluded Canada’s “Big Bang” in 1986, a term that refers to the de-regulation of the financial services industry which eliminated the restrictions banning commercial banks from undertaking investment underwriting and trust activities. Unlike other big Canadian banks, Toronto-Dominion opted to build up its investment division, the Toronto Dominion Securities Inc., (established 1987) organically rather than buying up existing investment underwriters, a route taken by the rest of the Big Five banks.

The good times in the 1980s eventually led to a real estate (both residential and commercial) bubble that burst in 1989. Fortunately TD’s losses were contained by its prudent management. In 1992, the bank acquired the ailing Central Guaranty Trust Co. for CAD $125-million, and gained 154 branches. Just one year later, TD launched a full-service brokerage service called TD Evergreen. In this regard, TD was a late entrant into the brokerage service, lagging behind the other Big Five.

Recent transaction(s):

• In 1996, TD bought Waterhouse Investor Services, the No. 4 discount broker in the U.S., for CAD $720-million (USD $525-million). The firm adopted a new name TD Waterhouse. Subsequently, TD re-branded its Canadian discount broker TD Greenline as TD Waterhouse also.
• In 1998, shortly after rivals the Royal Bank of Canada announced its surprise merger plan with the Bank of Montreal, TD announced its own merger proposal with the Canadian Imperial Bank of Commerce. However, the reduction of the Big Five into Mega Two, plus a stand-alone Bank of Nova Scotia, raised serious anti-competitive concerns and the Ministry of Finance quickly denied both mergers.
• In 1999, amidst the explosion of the tech stock boom and the on-line trading craze, TD sold a 12% stake in TD Waterhouse in an IPO for USD $1.1-billion (CAD $1.47-billion). The IPO gave TD Waterhouse an implied value of CAD $12.2-billion, or about 17 times what TD paid for Waterhouse just three years ago.
• The internet stock boom was short-lived. After reaching a high of 5,048 points on 2000-03-09, the NASDAQ index collapsed and so did on-line trading activities. In 2001, TD offered USD $409-million (CAD $618-million) to buy back the 12% of TD Waterhouse that it didn't own.
• In 2000, TD bought Newcrest Holdings Inc. (Newcrest Capital) for CAD $225-million. Newcrest provided institutional equity sales, trading, research and underwriting services.
• Also in 2000, TD bought CT Financial Services Inc. (Canada Trust) from conglomerate British American Tobacco/ Imasco for CAD $8.0-billion. In the complex deal, BAT bought the 58% of Imasco Ltd. that it didn’t own for GBP 4.2-billion (USD $6.8-billion, CAD $10.3-billion), then sold Imasco’s CT Financial Services to TD for CAD $8.0-billion (GBP 3.2-billion). All of TD's Canadian retail branches were re-branded TD Canada Trust subsequently.
• In 2003, TD bought the 57-branch Ontario network from Laurentian Bank.
• In 2004, TD bought 51% of Banknorth for USD $3.8-billion to form TD Banknorth.
• In 2005, TD Banknorth bought New Jersey-based Hudson United Bancorp for USD $1.9-billion (CAD $2.2-billion).
• In 2005, TD sold TD Waterhouse USA to Ameritrade for USD $3.3-billion in stock to form TD Ameritrade. TD ended up holding a 32% stake in the new TD Ameritrade, becoming its single largest shareholder. TD Waterhouse's Canadian and U.K. operations were not part of the deal and remained 100% owned by TD Bank.
• In 2006, TD bought Canadian auto financing company VFC for CAD $326-million.
• Also in 2006, subsidiary TD Banknorth bought New Jersey-based Interchange Financial for USD 468-million (CAD $545-million).
• In 2007, TD bought out the 43% of TD Banknorth it did not already own for CAD $3.7-billion (USD $3.3-billion).
• In 2007, TD agreed to buy Cherry Hill, New Jersey-based Commerce Bancorp Inc. for CAD $8.25-billion (USD $8.25-billion) in cash and stock. Commerce Bank operated 460 branches in New Jersey, New York, Connecticut, Pennsylvania, Delaware, Washington D.C., Virginia, Maryland and Southeast Florida. Commerce Bank's branches (called "stores") were open 7-day-a-week and had extended operating hours. The transaction almost doubled Toronto-Dominion's presence in the U.S. and made it the No. 7 bank in North America. The purchase also gave TD a major foothold in the wealthy urban markets of New York City, Philadelphia, Washington D.C. and Miami. All of TD's U.S. retail operations were re-branded TD Bank subsequently.
• In 2009, TD raised its stake in on-line broker TD Ameritrade Holding Corp. to 45% from 39.9% for USD $515-million (CAD $643-million).
• In April 2010, TD Bank took over the branch networks, client accounts, deposits and loans of three bankrupt Floridian banks that were placed under the administration of the Federal Deposit Insurance Corp. The three banks acquired were the Riverside National Bank of Florida (58 branches), First Federal Bank of North Florida (8 branches) and AmericanFirst Bank (3 branches). Like other banks sold by the FDIC, the acquiring bank and FDIC agreed to share future loan losses based on a complex formula. In this case, the transactions would cost FDIC’s insurance fund USD $508-million. TD Bank already had 28 offices in Florida before these purchases.
• In May 2010, TD acquired the ailing South Financial Group of Greenville, S.C., for USD $192-million. South Financial operated 110 branches in North and South Carolinas, and another 66 in Central and Southern Florida.
• In December 2010, TD acquired auto-leasing firm Chrysler Financial from private-capital firm Cerberus Capital Management for USD $6.3-billion in cash (CAD $6.41-billion). The purchase would make TD the top five auto lease financer in the U.S. Chrysler Financial had USD $5.9-billion in net assets, the additional USD $400-million in the purchase price represented goodwill.
• In August 2011, TD acquired Bank of America's Canadian credit card operations, MBNA Canada, for CAD $8.6-billion (USD $8.5-billion). TD paid CAD $7.5-billion in cash and assumed CAD $1.1-billion of liabilities and the amount represented a premium of CAD $100-million over the book value of the receivables. The purchase added 1.8-million MasterCard accounts to TD's existing 4-million Visa accounts and more than doubled TD's credit card balances.
• In October 2012, TD acquired U.S. retailer Target Corp.'s existing Visa and private-label credit card portfolio with a current gross outstanding balance of USD $5.9-billion (CAD $5.9-billion).
• In December 2012, TD acquired New York City-based asset manager Epoch Holding Corp. for USD $688-million (CAD $693-million).  Epoch had about USD $24-billion in assets under management.
• In August 2013, TD sold its TD Waterhouse Institutional Services unit to the National Bank of Canada for CAD $250-million.  The unit provided custody, trading, clearing, settlement and record-keeping services for portfolio managers and brokers.
• In May 2015, TD acquired U.S. upmarket department store Nordstrom Inc.'s Visa and private-label credit card portfolio. Terms of the deal were not disclosed, other than that the portfolio had USD $2.2-billion in receivables
• In October 2016, TD and its 42%-owned American discount brokerage TD Ameritrade bought and carved up privately-held Scottrade Financial Services. Under the two-step agreement, TD Bank, NA would acquire Scottrade Bank for USD $1.3-billion (USD $1 = CAD $1.335) in cash from Scottrade Financial Services, then TD's 42%-owned TD Ameritrade would acquire Scottrade Financial Services for USD $4.0-billion, or USD $2.7-billion net of the proceeds from the sale of Scottrade Bank. TD Bank would subscribe to enough new shares of TD Ameritrade being issued to maintain a 41.4% ownership.
• In July 2018, TD agreed to buy Regina, Saskatchewan-based Greystone Capital Management Inc. for CAD $792-million. Greystone is a privately-held institutional asset manager with CAD $36-billion of assets under management. The acquisition will increase the TD Asset Management's total assets to CAD $393-billion. (CAD $1 = USD $0.7615)
• In November 2019, TD's 43%-owned Omaha-based TD Ameritrade Holding Corp. agreed to be sold to Charles Schwab Corp. for USD $26-billion in stock. Following the sale, existing Charles Schwab shareholders would own approximately 69% in the combined company, existing TD Ameritrade shareholders would own 18% and TD would own 13.4% but its voting rights would be capped at 9.9%. Before the combination, TD Ameritrade had 12 million client accounts with USD $1.3-trillion of assets under management; whereas Charles Schwab had 12.1 million client accounts, 1.7 million corporate retirement plan clients and 1.4 million bank accounts with USD $3.77 trillion of assets. Back in October 2019, Charles Schwab announced that it would completely eliminate commissions on online stock trades, sending share prices of rivals E*Trade Financial and TD Ameritrade down 20%
• In February, 2022, TD announced that it would buy Memphis-based First Horizon Corp. for USD $13.4-billion (CAD $17.1-billion) in cash. First Horizon operated over 400 branches in 12 Southeastern states, including Tennessee, Louisiana, Florida, the Carolinas, Virginia, Georgia and Texas. The bank had USD $89-billion in assets. TD would gain 1.1-million consumer, small business and commercial clients, USD $55-billion of loans and USD $75-billion of deposits. The purchase would make TD the sixth largest bank in the United States. (See update below.)
• In August 2022, TD announced that it had agreed to buy New York-based investment dealer Cowen Inc. for USD $1.3-billion. To fund the purchase, TD sold 28.4-million shares of The Charles Schwab Corporation ("Schwab") for proceeds of approximately The Charles Schwab Corporation for proceeds of approximately US$1.9 billion, reducing TD's ownership interest from approximately 13.4% to 12.0%.
• In May 2023, following months of challenges in winning approval from U.S. regulators as well as turmoil which led to the failure of three American mid-sized banks (Silicon Valley Bank, Signature Bank and First Republic Bank) as well as Credit Suisee Group, TD and First Horizon Corp agreed terminate the USD $13.4-billion acquisition proposal. TD would pay USD $225-million to First Horizon based on the original terms.
• In October 2024, TD pleaded guilty to conspiracy to commit money laundering to the U.S. Department of Justice and three top banking regulators in the U.S. TD agreed to pay a fine of USD $3.05-billion. The Office of the Comptroller of Currency also imposed non-monetary penalties on TD including an asset cap, restrictions on opening branches and launching new products without approval.

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